Technological Progress and the Earnings of Older Workersby Yuriy Gorodnichenko, John P. Laitner, Jae Song and Dmitriy Stolyarov
WP 2013-280

• We develop an earnings dynamics model that shows how technological progress affects workers’ earnings at different ages.• Analyzing earnings data from 1950-2004, we find that earnings of younger workers rise commensurately with increases in productivity, whereas, earnings of 60-year old workers grow only about 90% as fast as overall technological progress. • However, we find that earnings growth from accumulating experience for older workers more than compensates for declines in ability to benefit from improvements in technology.• Although increases in longevity presumably encourage workers to consider longer careers, declines in earning power likely have the opposite effect, especially during eras of rapid technological change.